The world’s “central bank of central banks” warned about the rising possibility of fresh outbreaks of inflation.
The Switzerland-based Bank for International Settlements noted in a new report that consumers across the globe expect steep price increases in the next year — and that because of the lasting effect of COVID-era inflation, their predictions now risk becoming a self-fulfilling prophecy.
“When it comes to inflation expectations, it’s once bitten, twice shy,” a BIS official said.
The report gives clues to central bankers’ thinking as policymakers cautiously trim interest rates as inflation subsides.
Washington’s trade war adds to the volatility: Rising protectionism is eroding the global economic order, the BIS’ chief said, creating a “new era of heightened uncertainty and unpredictability.”
Chart showing the change in CPI — J.D. Capelouto
